BOC delisting process initiated…Floor Price remains at Rs 225.29…Offer opens Jan 24 and closes Jan 31…unlikely to succeed

Avid Blog Readers like Joseph Rodrigues has requested I comment on the BOC Delisting as I had blogged on this Opportunity twice earlier and since then BOC has surged over 50% from Rs 218 levels to current Rs 330 levels…check out my two earlier blogs on BOC in 2010

BOC Flares up over 20% on announcement of Delisting….blogged on this possibility earlier in January 2010…bet comes good…Look out for more MNC’s taking this route

Monday, June 28th, 2010 

What’s Bubbling in BOC ?…closed at Rs 218 but after recording a 52 week high of 227….Volumes are twice the two week average

Tuesday, January 19th, 2010 

BOC India has just announced  the delisting offer…the Floor Price remains at Rs 225.29 which was announced on June 14,2010 as the minimum price at which shares will be bought out by the Acquirer and Persons Acting in Concert…The Acquirer is BOC Group Ltd and PACs are LInde Holdings Netherlands BV and Linde Finance BV

http://www.bseindia.com/qresann/news.asp?newsid=4571f880-02c8-4946-9306-58102c429a68 

The Offer opens on January 24,2011 and closes on January 31,2011…It is unlikely to succeed as Current Market Price is Rs 330…unless ofcourse the Exit Price is discovered at around current market Price or even above and is accepted by the Acquirer on February 4,2011 when the announcement will be made on this 

The Mathematics work out like this

 

 

No of Shares of FV Rs 10

% of Total Capital

Held by Promoters

76308293

89.48

Proposed to be Acquired

8975930

10.52

 

Total No of Shares

 

85284223

 

100

 

 

Minimum No of Shares needed to be acquired to trigger Delisting possibility.This is when Promoter Group will hold at least 94.74% of Total equity or 80798273 shares…They currently hold 76308293 shares

4489980

 => 5.26% of Equity

 

Assumed Exit Price in Rs

Cost in Rs Crs of Acquiring minimum 5.26% or 4489980 Shares

Cost in Rs Crs of Acquiring full 10.52% or 8975930 Shares

Floor Price 225.29

101.15

202.22

250

112.25

224.40

275

123.47

246.84

300

134.70

269.28

325

145.92

291.72

350

157.15

314.16

 

 Current Market Price is @ Rs 330…so clearly the much lower Floor Price of Rs 225.29…a price level that was announced as minimum exit price in June 2010… is too low for any shareholder to consider …..why would a Shareholder offer the shares at any Price below the current market Price…so it is unlikely this offer which will last for the last week in this month will be successful…..unless a higher Exit Price than the Floor Price is discovered ,somewhere between Rs 325 and Rs 375 and  announced as accepted on February 4,2011 by the Acquirer where atleast the minimum quantity required of 4489980 shares is obtained…..This range would not be a bad price to exit as BOC has an equity of Rs 85.28 crs and should show an earning of  Rs 100 crs PAT in 2010 (December year end)…so an EPS of near Rs 12 should emerge…that’s 28 multiple at current market price of Rs 330   

So if you hold BOC then should you participate in this offer on the bourses ?…..my sense is that do so but at a reasonably higher price…Rs 375…I daresay even higher…even if your offer price is much higher than any Exoit Price discovered and accepted ,you will yet get a chance to exit at the accepted price as per SEBI Directives in direct offers even after delisting 

Just an Amusing…maybe annoying to some… Point to reiterate here…BOC Chairman,S M Datta had categorically denied in the FY 2008 AGM held in mid 2009 that there will be no delisting or buy back and that BOC has oulined a capex of Rs 1000 crs for the next three years !….just a year later in June 2010 the Delisting Proposal was announced……What happened Mr Datta ! ?…I sincerely hope this is not a case of misguiding and misleading and therefore poor corporate governance 

Addendum

BOC Price has dropped to Rs 307 today on January 14,2011…hope this is not an orchestrated move to ensure success of the Open Offer with a low Floor price of Rs 225.29

One thought on “BOC delisting process initiated…Floor Price remains at Rs 225.29…Offer opens Jan 24 and closes Jan 31…unlikely to succeed

  1. Gaurav

    Thanks. Very well analysed. I wonder if the company is really serious about delisting!

    Just wondering what happens to shareholders who don’t tender the shares held even after the company delists and the ‘exit window’ closes.

    Regards

    Joseph

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